Spring is in the air for the German economy

• Business climate in the SME sector consolidates at a high level in March
• Optimism at major corporations rising rapidly
• High spirits in the building sector
• Good economic outlook; risks fading

The mood in the German economy remains positive - evidence of growing economic optimism: As the current KfW-ifo SME Barometer indicates, both the business expectations and the situation assessments of SMEs consolidated at a high level in March. At 20.2 balance points, the business climate in the SME sector remains almost unchanged compared to the previous month (-0.9 points). Major corporations even made an exceedingly positive start to the spring season and closed the gap to the SME sector that had opened up since the turn of the year. Thanks to considerably more confident business expectations, the business climate in the major corporations sector has risen by 4.0 points to 20.3 balance points.

"The German economy has a positive outlook to the rest of the year; the various political risks are fading to the background in companies' perceptions," said Dr Jörg Zeuner, Chief Economist of KfW Group. The fact that the mood of export-dependent, large-scale industry improved by an impressive 6.5 points in March can be taken as a sign that the global economy is gathering momentum.

Yet positive signals are not only visible in the export economy, but also in the building sector, one of the supporting pillars of Germany's domestic economy. The business climate in large construction companies is improving significantly (+11.1 points to 37.5 balance points), while small and medium-sized enterprises in the construction industry have maintained their persistently high mood level (+0.2 points to 29.9 balance points) – construction companies from both size classes therefore top the German economy mood table in March.

"The level of economic optimism has a healthy foundation in the stable domestic economy and the apparent recovery of global trade. However, uncertainties continue to smoulder in the background – first and foremost the outcome of the Brexit negotiations, the protectionist intentions of the USA and the upcoming elections in Europe," continued Dr Zeuner. "In view of this situation, the growing optimism is also cause for concern in case of unexpected conflicts, as the disappointment would be felt all the more strongly."

The current KfW-ifo SME Barometer can be downloaded at: www.kfw.de/KfW-ifo-SME-Barometer